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/raid1/www/Hosts/bankrupt/CAR_Public/990406.MBX C L A S S A C T I O N R E P O R T E R Tuesday, April 6, 1999, Vol. 1, No. 43 Headlines ADVANCED MICRO: Milberg Weiss Files Complaint in California CHS ELECTRONICS: Zwerling Schachter Files Complaint in Florida DSP COMMUNICATIONS: April 9 Hearing on $3 Million Settlement FORD MOTOR: 7 of 20 Lease Agreement Disclosure Cases Dismissed FORD MOTOR: Asks for Review of Air Bag Venue & Dismissal FORD MOTOR: Avoids Ignition Switch Class Certification FORD MOTOR: Defending Four Defective Paint Cases at Year-End FORD MOTOR: Flat Glass Price Fixing Discovery Continues FORD MOTOR: Ford/Citibank Visa Rebate Program Discovery Underway FORD MOTOR: Lifetime Service Guarantee Case Moved to CA Fed Ct FORD MOTOR: Thick Film Ignition Module Trial Commences April 5 FORD MOTOR: Will Seek Dismissal of Lease Residual Litigation INFORMATION ANALYSIS: Abbey Gardy Files Complaint in Virginia LOUISIANA PACIFIC: OSB Siding Claims Exceed Settlement Fund PARTY CITY: Kaplan Kilsheimer Files Complaint in New Jersey PARTY CITY: Stull Stull Files Complaint PATHOGENESIS CORP.: Wechsler Harwood Files Washington Suit PATHOGENESIS CORP.: Zwerling Schachter Files Washington Suit SAFESKIN CORPORATION: Abbey Gardy Files Complaint in California SAFESKIN CORPORATION: Milberg Weiss Files Suit in California STAFFMARK, INC.: Milberg Weiss Files Complaint in California TOTAL RENAL: Milberg Weiss Files Complaint in California ********* ADVANCED MICRO: Milberg Weiss Files Complaint in California ----------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit in the United States District Court for the Northern District of California against Advanced Micro Devices, Inc. (NYSE: AMD) and its Chairman and CEO, Walter J. Sanders, III. The complaint alleges violations of the Securities Exchange Act of 1934, and is on behalf of all who purchased AMD securities between October 6, 1998 and March 8, 1999. CHS ELECTRONICS: Zwerling Schachter Files Complaint in Florida -------------------------------------------------------------- Zwerling, Schachter & Zwerling, LLP has filed a class action lawsuit for violations of the federal securities laws against CHS Electronics, Inc. (NYSE: HS) and certain officers and directors in the United States District Court for the Southern District of Florida. The lawsuit was brought on behalf of all persons who purchased CHS common stock between May 5, 1998 through March 22, 1999. The complaint charges CHS and certain officers and directors with violations of the Sections 10(b) and 20(a) of the Exchange Act. Specifically, the complaint alleges that the defendants issued a series of false and misleading statements concerning the Company's revenue and net income, starting with an announcement by CHS of strong income and sales gains. In reality, gains for the quarter were due to a one time foreign exchange windfall. Such material misstatements and deceptions by the defendants forced the Company to restate its 2Q and 3Q of Fiscal 1998. Because of the issuance of such false and misleading statements, the price of CHS common stock was artificially inflated throughout the Class Period. DSP COMMUNICATIONS: April 9 Hearing on $3 Million Settlement ------------------------------------------------------------ On May 12, 1997, a class action lawsuit was filed against DSP COMMUNICATIONS, INC., and several of its officers and directors in the Superior Court of California, Santa Clara Country. A second, identical lawsuit was filed on May 22, 1997. The complaints, which were consolidated, alleged that the Company and certain of its officers and directors violated California securities laws in connection with certain statements allegedly made during the first quarter of 1997, and sought damages in an unspecified amount, interest, attorney's fees and other costs, and other equitable and injunctive relief. On February 26, 1998, two of the plaintiffs in the state action filed a similar complaint in the U.S. District Court for the Northern District of California. The complaint made the same allegations as the amended complaint filed in state court, but charged violations of federal securities laws. The Company has executed an agreement to settle these lawsuits. Under the agreement, the claims will be settled for $3,000,000, which will be funded by insurance proceeds. The settlement is subject to approval by the court. The court has set a date of April 9, 1999 for hearing on final approval. FORD MOTOR: 7 of 20 Lease Agreement Disclosure Cases Dismissed -------------------------------------------------------------- Twenty purported class action lawsuits have been filed in various courts against Ford Motor Credit Company and, in all but three cases, Primus Automotive Financial Services, Inc., a subsidiary of Ford Credit. The lawsuits, each of which purports to be brought on behalf of a statewide class, allege that Ford Credit and Primus leasing contracts improperly failed to disclose acquisition and administrative fees that are included in the amount of a customer's monthly lease payment. Plaintiffs seek compensatory damages in the amount of all such undisclosed fees, an injunction prohibiting the companies from continuing the practice of not disclosing such fees, attorneys' fees, interest, costs and in some cases, punitive damages. Ford is seeking dismissal of all the lawsuits. A Georgia federal court and Alabama, Arkansas, Iowa, Minnesota, Missouri and Wisconsin state courts have recently dismissed seven of the lawsuits, finding that itemization of monthly lease charges is not required under federal or state law. FORD MOTOR: Asks for Review of Air Bag Venue & Dismissal -------------------------------------------------------- One purported class action lawsuit is pending in Alabama state court against Ford Motor Company alleging that air bags are defective because they can cause injury, particularly to children and small adults. Plaintiffs allege that their vehicles are unsuitable for transporting children and small adults and, therefore, are not worth the purchase price they paid. They seek compensatory damages, including the alleged diminution in value of their vehicles. The Alabama action appears to be nationwide in scope and purports to represent owners of 1993 through 1996 (and some 1997) model year cars and light trucks with passenger air bags. The plaintiffs named as defendants Ford, General Motors Corporation, Chrysler Corporation, and an Alabama automobile dealership. The trial court denied defendants' motion for change of venue, and the Alabama Supreme Court declined to hear an appeal on that issue. Ford has asked the court to reconsider that decision. Ford's motion to dismiss this action is pending. FORD MOTOR: Avoids Ignition Switch Class Certification ------------------------------------------------------ In 1996, Ford Motor Company was served with fourteen purported class action lawsuits alleging that certain 1983 to 1993 model year vehicles were equipped with defective ignition switches that could cause an electrical short circuit, resulting in smoke and fire damage. Most of the suits were brought on behalf of plaintiffs who have not experienced a problem, but who claim that their vehicles have diminished value because of the allegedly defective switches. Some of the lawsuits were purportedly brought on behalf of plaintiffs who claim to have suffered fire or smoke damage to their vehicles. Plaintiffs seek unspecified compensatory damages, punitive damages, attorneys' fees and costs, as well as injunctive relief requiring, among other things, that Ford replace the allegedly defective ignition switch in all affected vehicles. All fourteen lawsuits were consolidated for pretrial proceedings in federal court in New Jersey. In August 1997, the court denied plaintiffs' motion for class certification. In September 1997, the court dismissed all of the claims brought by the non- incident class members except the implied warranty claims brought under Louisiana law and the breach of contract claims. In May 1998, plaintiffs in the "incident" (smoke and fire damage) cases filed an amended complaint which attempts to consolidate all such claims in a single action. The complaint proposes alternative classes and several subclasses. The plaintiffs have indicated that the proposed classes and subclasses may be amended following further discovery. In August 1998, the court reaffirmed its denial of class certification and ruled on plaintiffs' motion to remand the actions, remanding one of the fourteen consolidated actions to Alabama state court and retaining jurisdiction over the others. In October 1998, plaintiffs in the non-incident cases filed a motion to amend an earlier court ruling that dismissed with prejudice the claims under the federal Magnuson-Moss Warranty Act and requested leave to file an amended complaint restating these and other claims. The court denied the motion as to two of the plaintiffs but allowed the third plaintiff to amend the complaint to pursue breach of express warranty claims and claims for injunctive relief and/or restitution under the California Business and Professions Act. In a related matter, State Farm Mutual Automobile Insurance Company filed a lawsuit in federal court in California in January 1998 against Ford and United Technologies Automotive, Inc. State Farm seeks damages for insurance claims it paid to cover vehicle damage caused by allegedly defective ignition switches, the deductible amounts paid by its insureds, other compensatory damages, disgorgement of profits and attorneys' fees and costs. Ford has moved to dismiss State Farm's claims and obtained a transfer of the action to the New Jersey federal court where the ignition switch class actions are pending. State Farm opposed the transfer. Also, a private insurer, the California State Automobile Association Inter-insurance Bureau has filed a separate action against Ford seeking to recover amounts it paid for 15 vehicle fire claims allegedly caused by defective ignition switches. The Bureau's lawsuit has also been transferred to the New Jersey federal court for consolidated pre-trial proceedings with the other ignition switch-related lawsuits. Ford has moved to dismiss the Bureau's complaint. FORD MOTOR: Defending Four Defective Paint Cases at Year-End ------------------------------------------------------------ There are four purported class actions pending against Ford Motor Company alleging defects in the paint processes used on more than six million vehicles Ford manufactured in model years 1984 through 1993. A. One case (Landry) is nationwide in scope and is pending in the U.S. District Court for the Eastern District of Louisiana. In August 1998, the Landry court denied the plaintiffs' motion for class certification. In February 1999, the Court of Appeals denied plaintiffs' request to permit them to appeal the class certification decision prior to trial. B. In another case (Sheldon), a Texas state court certified two subclasses of Texas residents for trial. The Texas Court of Appeals affirmed the class certification order and approved a bifurcated trial process that would require class members to prove causation and damages in separate trials following a classwide trial on the existence of a defect and Ford's knowledge of the defect. Ford appealed the class certification to the Texas Supreme Court and oral argument was heard in February 1999. Ford is awaiting a ruling. C. The third case, Nienhuis, was filed in Illinois state court in May 1998. It raises the same allegations as Landry and Sheldon with respect to a larger group of vehicles, and alleges a nationwide class or, alternatively, a class of Illinois residents. Ford removed the action to federal court and, in June 1998, the case was conditionally transferred to the Louisiana federal court where Landry is pending. The case was later remanded to state court, and Ford's appeal of the remand order is pending. D. The fourth case, Clayman, was filed in Pennsylvania state court and asserts, on behalf of Pennsylvania residents, claims similar to those raised in Nienhuis. Ford removed Clayman to federal court and sought to have it consolidated with Landry in the U.S. District Court for the Eastern District of Louisiana. It too was remanded to state court. FORD MOTOR: Flat Glass Price Fixing Discovery Continues ------------------------------------------------------- Ford Motor Company is a defendant in 14 purported class actions brought on behalf of purchasers of flat glass alleging that Ford and other manufacturers fixed prices and allocated markets in violation of federal and state antitrust laws. Twelve of the class actions are nationwide in scope and pending in federal court and the other two class actions are statewide in scope and are pending in state courts. The other defendants include Pilkington, Libbey-Owens Ford, AFG Industries, PPG Industries, Asahi Glass, and Guardian Industries. Nineteen similar purported class actions are pending in various courts in which Ford is not currently named as a defendant. A total of 28 federal cases have been consolidated in a federal court in Pennsylvania for pretrial proceedings. The parties are currently engaged in discovery related to class certification. In the actions involving Ford, the plaintiffs seek economic and treble damages. FORD MOTOR: Ford/Citibank Visa Rebate Program Discovery Underway ---------------------------------------------------------------- Following the June 1997 announcement of the termination of the Ford/Citibank credit card rebate program, five purported nationwide class actions and one purported statewide class action were filed against Ford Motor Company; Citibank is also a defendant in some of these actions. The actions allege damages in an amount up to $3,500 for each cardholder who obtained a Ford/Citibank credit card in reliance on the rebate program and who is precluded from accumulating discounts toward the purchase or lease of new Ford vehicles after December 1997 as a result of the termination of the rebate program. Plaintiffs contend that defendants deceptively breached their contract by unilaterally terminating the program, that defendants have been unjustly enriched as a result of the interest charges and fees collected from cardholders, and further, that defendants conspired to deprive plaintiffs of the benefits of their credit card agreement. Plaintiffs seek compensatory damages, or alternatively, reinstatement of the rebate program, and punitive damages, costs, expenses and attorneys' fees. The five purported nationwide class actions were filed in state courts in Alabama, Illinois, New York, Oregon and Washington, and the purported statewide class action was filed in a California state court. The Alabama court has conditionally certified a class consisting of Alabama residents. Ford removed all of the cases to federal court, which consolidated and transferred the cases to federal court in Washington for pretrial proceedings. In September 1998, Ford and Citibank jointly filed a motion to dismiss the consolidated lawsuit pending before the court in Washington. The motion to dismiss was denied in November 1998 and the parties are currently pursuing pretrial discovery. The plaintiffs in the Oregon and Alabama cases have moved to remand their cases to state court. FORD MOTOR: Lifetime Service Guarantee Case Moved to CA Fed Ct -------------------------------------------------------------- In June 1998, a purported class action lawsuit was filed against Ford Motor Company in California state court challenging the legality of Ford's termination of the Lifetime Service Guarantee program as of January 1, 1992. Plaintiff alleges that the program, which ran from 1983 until the program's termination date, constituted a product warranty that could not be terminated. Plaintiff alleges claims for violation of the federal Magnuson-Moss Warranty Act, breach of contract, negligent misrepresentation, violation of the California Song- Beverly Consumer Warranty Act, violation of the California Consumer Legal Remedies Act ("CLRA"), violations of the California Unfair Competition Law ("UCL") and declaratory relief. The Magnuson-Moss and declaratory relief claims are alleged on behalf of a purported nationwide class. The breach of contract, negligent misrepresentation, and Song-Beverly claims are alleged on behalf of a purported subclass of California residents. The CLRA and UCL claims are alleged on behalf of "the general public" ostensibly under "private attorney general" provisions in those statutes. Plaintiff claims compensatory, exemplary, and punitive damages, attorneys' fees, civil penalties, disgorgement, and interest in unspecified amounts, as well as an injunction compelling Ford to reinstate the Lifetime Service Guarantee program. Ford has removed the case to federal court in California. The parties are currently engaged in pretrial discovery. FORD MOTOR: Thick Film Ignition Module Trial Commences April 5 -------------------------------------------------------------- Six purported class actions are pending in state courts on behalf of owners and lessees of 1983 through 1995 model year Ford vehicles containing a distributor-mounted thick film ignition (TFI) module. The plaintiffs allege that distributor- mounted TFI modules are defective because they have a high propensity to fail due to exposure to engine heat, causing the engine to stumble, stall, or not start. The plaintiffs in these cases seek pre-and post-judgment interest, attorneys' fees, disgorgement of profits, compensatory damages, punitive damages, notice to the public, and the recall and retrofit of all vehicles with the allegedly defective TFI modules from Ford Motor Company. The cases are pending in Alabama, California, Illinois, Maryland, Tennessee and Washington. The Alabama and Tennessee cases were conditionally certified as nationwide class actions (excluding California). The cases in Illinois, Maryland and Washington purport to be regional class actions, and the California case is statewide in scope. The California case is the "lead" case and proceedings in the other cases are stayed. The court has certified a class of California residents who currently own or lease the subject vehicles and residents who purchased such vehicles when they were new. The court also certified a sub-class of consumers pursuing Consumer Legal Remedies Act claims, bringing the total class to approximately 3.2 million members. In the unlikely event that plaintiffs recovered fully on all of their claimed damages, the total award in the California action would exceed $4 billion. Trial in the California case is scheduled for April 5, 1999. The trial court recently denied Ford's motions to decertify the class and for summary judgment. Ford is seeking leave to appeal some of those rulings. If leave to appeal is denied, Ford will have the right to appeal after trial if necessary. FORD MOTOR: Will Seek Dismissal of Lease Residual Litigation ------------------------------------------------------------ In January 1998 in connection with a case pending in Illinois state court, Ford and Ford Credit were served with a summons and intervention counterclaim complaint relating to Ford Motor Credit Company's leasing practices (Higginbotham v. Ford Credit). The counterclaim plaintiff, Carla Higginbotham, is a member of a class that has been conditionally certified for settlement purposes in Shore v. Ford Credit. In the Shore case, Ford Credit commenced an action for deficiency against Virginia Shore, a Ford Credit lessee. Shore counterclaimed for purported violations of the Truth-in-Leasing Act (alleging that certain lease charges were excessive) and the Truth-in-Lending Act (alleging that the lease lacked clarity). Shore purported to represent a class of all similarly situated lessees. Ford was not a party to the Shore case. Higginbotham objected to the proposed settlement of the Shore case, intervened as a named defendant, filed separate counterclaims against Ford Credit, and joined Ford as an additional counterclaim defendant. Higginbotham asserts claims against Ford Credit for violations of the Consumer Leasing Act, declaratory judgment concerning the enforceability of early termination provisions in Ford Credit's leases, and fraud. She also asserts a claim against Ford Credit and Ford for conspiracy to violate the Truth-in-Lending Act. The Higginbotham counterclaims allege that Ford Credit inflates the residual values of its leased vehicles, which results in lower monthly lease payments but higher termination fees for lessees who exercise their right of early termination. Higginbotham claims that the early termination fees were not adequately disclosed on the lease form and that the fees are excessive and illegal because of the allegedly inflated residual values. She also alleges that Ford dictated the residual values to Ford Credit and thereby participated in an unlawful conspiracy. This case was stayed pending the approval/rejection of the settlement in Shore. In November 1998, the court issued a ruling that rejected the proposed settlement in Shore. Consequently, the Higginbotham case is proceeding and Ford Credit is in the process of responding to discovery requests. Ford intends to remove the case to federal court and move to dismiss the counterclaims. INFORMATION ANALYSIS: Abbey Gardy Files Complaint in Virginia ------------------------------------------------------------- Abbey, Gardy & Squitieri, LLP filed a class action in the United States District Court for the Eastern District of Virginia against Information Analysis, Inc. (Nasdaq: IAIC) and certain of its officers and directors. The suit is on behalf of all who purchased Information Analysis common stock between February 26, 1998 and September 28, 1998. LOUISIANA PACIFIC: OSB Siding Claims Exceed Settlement Fund ----------------------------------------------------------- LOUISIANA PACIFIC CORP. has been named as a defendant in numerous class action and non-class action proceedings, brought on behalf of various persons or purported classes of persons (including nationwide classes in the United States and Canada) who own or have purchased or used OSB (oriented strand board) siding manufactured by L-P, because of alleged unfair business practices, breach of warranty, misrepresentation, conspiracy to defraud, and other theories related to alleged defects, deterioration, or failure of OSB siding products. The United States District Court for the District of Oregon has given final approval to a settlement between L-P and a nationwide class composed of all persons who own, have owned, or subsequently acquire property on which L-P's OSB siding was installed prior to January 1, 1996, excluding persons who timely opted out of the settlement and persons who are members of the settlement class in the Florida litigation described below. Under the settlement agreement, an eligible claimant whose claim is filed prior to January 1, 2003 (or earlier in certain cases) and is approved by an independent claims administrator, is entitled to receive from the settlement fund established under the agreement a payment equal to the replacement cost (determined by a third-party construction cost estimator and currently estimated to be in the range of $2.20 to $6.40 per square foot depending on the type of product and geographic location) of damaged siding, reduced by a specific adjustment (of up to 65 percent) based on the age of the siding. Class members who previously submitted or resolved claims under any other warranty or claims program of L-P may be entitled to receive the difference between the amount payable under the settlement agreement and the amount previously paid. The extent of damage to OSB siding at each claimant's property is determined by an independent adjuster in accordance with a specified protocol. Settlement payments are not subject to adjustment for improper maintenance or installation. A claimant who is dissatisfied with the amount to be paid under the settlement may elect to pursue claims against L-P in a binding arbitration seeking compensatory damages without regard to the amount of payment calculated under the settlement protocol. A claimant who elects to pursue an arbitration claim must prove his entitlement to damages under any available legal theory, and L-P may assert any available defense, including defenses that otherwise had been waived under the settlement agreement. If the arbitrator reduces the damage award otherwise payable to the claimant because of a finding of improper installation, the claimant may pursue a claim against the contractor/builder to the extent the award was reduced. The settlement requires L-P to pay $275 million into the settlement fund in seven annual installments beginning in mid- 1996: $100 million, $55 million, $40 million, $30 million, $20 million, $15 million, and $15 million. As of December 31, 1998, L-P had funded the first three installments. L-P also had funded a significant portion of the last four installments through the Early Payment Program discussed below. If at any time after the fourth year of the settlement period the amount of approved claims (paid and pending) were to equal or exceed $275 million, then the settlement agreement would terminate as to all claims in excess of $275 million unless L-P timely elects to provide additional funding within 12 months thereafter equal to the lesser of (i) the excess of unfunded claims over $275 million or (ii) $50 million and, if necessary to satisfy unfunded claims, a second payment within 24 months equal to the lesser of (i) the remaining unfunded amount or (ii) $50 million. If the total payments to the settlement fund are insufficient to satisfy in full all approved claims filed prior to January 1, 2003, then L-P may elect to satisfy the unfunded claims by making additional payments into the settlement fund at the end of each of the next two 12-month periods or until all claims are paid in full, with each additional payment being in an amount equal to the greater of (i) 50 percent of the aggregate sum of all remaining unfunded approved claims or (ii) 100 percent of the aggregate amount of unfunded approved claims, up to a maximum of $50 million. If L-P fails to make any such additional payment, all class members whose claims remain unsatisfied from the settlement fund may pursue any available legal remedies against L-P without regard to the release of claims provided in the settlement agreement. If L-P makes all payments required under the settlement agreement, including all additional payments as specified above, class members will be deemed to have released L-P from all claims for damaged OSB siding, except for claims arising under their existing 25-year limited warranty after termination of the settlement agreement. The settlement agreement does not cover consequential damages resulting from damage to OSB Inner-Seal siding or damage to utility grade OSB siding (sold without any express warranty), either of which could create additional claims. In addition to payments to the settlement fund, L-P was required to pay fees of class counsel in the amount of $26.25 million, as well as expenses of administering the settlement fund and inspecting properties for damage and certain other costs. After accruing interest on undisbursed funds and deducting class notification costs, prior claims costs (including payments advanced to homeowners in urgent circumstances) and payment of claims under the settlement, as of December 31, 1998, approximately $5.8 million remained of the $195 million paid into the fund to date. The claims submitted to the claims administrator to date substantially exceed the $275 million of payments that L-P is required to make under the settlement agreement. As calculated under the terms of the settlement, claims submitted and inspected exceeded $500 million at December 31, 1998, compared to $475 million at September 30, 1998. Both figures include approximately $18 million of claims paid directly by L-P to claimants under the settlement agreement prior to the establishment of the settlement fund. L-P has not decided whether it will provide the optional funding discussed above in excess of the required $275 million after the fourth year of the settlement, to the extent that it still remains an issue following implementation of the Early Payment Program and Second Settlement Fund discussed below, under which L-P effectively has paid a substantial portion of the claims that otherwise potentially would have been payable out of the first two $50 million optional payments. Under the terms of the settlement, L- P must make a decision regarding the optional funding by August 2000. As an alternative to making additional payments, L-P could elect to pursue other options, including allowing the settlement agreement to terminate, entitling claimants with unsatisfied claims to pursue available legal remedies against L-P. On October 26, 1998, L-P announced an agreement to offer early payments to eligible claimants who have submitted valid and approved claims under the original settlement agreement (the "Early Payment Program") and to establish an additional $125 million fund to pay all other approved claims that are filed before December 31, 1999 (the "Second Settlement Fund"). The Early Payment Program applies to all claimants who are entitled to be paid from the $80 million of mandatory payments that remain to be paid under the settlement and to all claimants who otherwise would be paid from the proceeds of the two optional $50 million payments that L-P may elect to make under the settlement. The early payments from the $80 million are discounted at a rate of 9% per annum calculated from their original payment dates (1999-2002) to the date the early payment offer was made. The early payments from the two $50 million optional contributions are discounted at a rate of 12% per annum calculated from 2001 and 2002. Claimants may accept or reject the discounted early payments in favor of remaining under the original settlement, but may not arbitrate the amount of their early payments. As of March 5, 1999, approximately $128.0 million in Early Payment Program checks had been mailed and $114.4 million had been cashed in settlement of claims; approximately $5.0 million in checks remain to be mailed. The $125 million Second Settlement Fund represents an alternative source of payment for all approved claims not eligible for the Early Payment Program and all new claims filed before December 31, 1999. In early 2000, claimants electing to participate in the Second Settlement Fund will be offered a pro rata share of the fund in complete satisfaction of their claims, which they may accept or reject in favor of remaining under the original settlement. Claimants who accept their pro rata share may not file additional claims under the settlement or arbitrate the amount of their payments. Claimants who elect not to participate in the Second Settlement Fund remain bound by the terms of the original settlement. If L-P is dissatisfied with the number of claimants who elect to be paid from the Second Settlement Fund, L-P may refuse to proceed with funding at its sole option. In that event, the Second Settlement Fund will be canceled and all the claimants who had elected to participate in it will be governed by the original settlement. A settlement of a related class action in Florida was approved by the Circuit Court for Lake County, Florida, on October 4, 1995. Under the settlement, L-P has established a claims procedure pursuant to which members of the settlement class may report problems with L-P's OSB siding and have their properties inspected by an independent adjuster, who will measure the amount of damage and also determine the extent to which improper design, construction, installation, finishing, painting, and maintenance may have contributed to any damage. The maximum payment for damaged siding is $3.40 per square foot for lap siding and $2.82 per square foot for panel siding, subject to reduction by up to 75 percent for damage resulting from improper design, construction, installation, finishing, painting, or maintenance, and also subject to reduction for age of siding more than three years old. L-P has agreed that the deduction from the payment to a member of the Florida class will be not greater than the deduction computed for a similar claimant under the national settlement agreement described above. Class members will be entitled to make claims until October 4, 2000. Other OSB Matters Three separate purported class actions on behalf of owners and purchasers of properties in which L-P's OSB panels were used for flooring, sheathing, or underlayment have been consolidated in the United States District Court for the Northern District of California under the caption Agius v. Louisiana-Pacific Corporation. The actions seek damages and equitable relief for alleged fraud, misrepresentation, breach of warranty, negligence, and improper trade practices related to alleged improprieties in testing, product certification, and marketing of OSB structural panels, and alleged premature deterioration of such panels. A separate state court action entitled Carney v. Louisiana- Pacific Corporation is pending in the Superior Court of the State of California for the City and County of San Francisco, seeking relief under California consumer protection statutes based on similar allegations. On February 27, 1998, the United States District Court for the Northern District of California entered an order approving a settlement that would resolve the above actions. A final order approving the settlement is expected pending resolution of an appeal by a single claimant. The settlement class, other than persons who opted out, is generally composed of all persons who purchased L-P OSB sheathing or acquired real property or structures in the United States containing L-P OSB sheathing between January 1, 1984, and October 22, 1997, but only if they have retained ownership of the product. Under the settlement agreement, an eligible claimant who files a claim prior to October 22, 2017, upon review of the claim by the claims administrator, will be entitled to recover the reasonable cost of repair or replacement of any L-P OSB sheathing determined to have failed to perform its essential function as warranted and not occasioned by misuse, negligent or intentional misconduct of a third party or an event over which L-P had no control. The settlement agreement also provides for payment of a $1.5 million grant to the University of California Forest Products Laboratory and reasonable attorney fees of class counsel. In accordance with the terms of the settlement, L-P exercised its right to go forward with the claims process prior to the resolution of the appeal and began sending claim form packages on August 19, 1998. As of December 31, 1998, 4,454 notice packages had been mailed, 2,282 claim form packages had been mailed, 96 claim forms had been received, and 24 claims had been verified as valid and forwarded for inspection. To date, five claims have been inspected by third-party inspectors; all five have been denied and resulted in no cash settlements. PARTY CITY: Kaplan Kilsheimer Files Complaint in New Jersey ----------------------------------------------------------- Kaplan, Kilsheimer & Fox LLP has filed a class action lawsuit against Party City Corporation (Nasdaq: PCTY) and certain of its officers and directors in the United States District Court for the District of New Jersey. The suit is brought on behalf of all who acquired the common stock of Party City between July 9, 1998 and March 18, 1999. The complaint charges Party City and certain officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint alleges that defendants issued a series of false statements and failed to disclose material facts concerning the Company's financial condition and compliance with certain loan covenants. Because of the issuance of a series of false and misleading statements, the price of Party City common stock was artificially inflated. Prior to the disclosure of the adverse facts, certain insiders and directors sold 98,000 shares of Party City common stock to the unsuspecting investing public at artificially inflated prices, and over $1.5 million in proceeds was realized as a result of these sales. PARTY CITY: Stull Stull Files Complaint --------------------------------------- Stull, Stull & Brody has filed a class action lawsuit for violations of federal securities laws on behalf of purchasers of Party City Corporation (NASDAQ:PCTY) securities between October 22, 1998 to March 19, 1999. Defendants include Party City and certain of its officers and directors. The Complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10- b(5) by issuing false and misleading statements regarding Party City's financial and business conditions. PATHOGENESIS CORP.: Wechsler Harwood Files Washington Suit ---------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP, filed a class action lawsuit on March 30, 1999 in the United States District Court for the Western District of Washington, against Pathogenesis Corporation (Nasdaq: PGNS) and certain of its directors and officers on behalf of all persons who acquired shares of PGNS' publicly traded securities between January 25, 1999 and March 22, 1999. The complaint alleges that defendants violated the federal securities laws (Sections 10(b) and 20(a) of the Securities Exchange Act of 1934) by misrepresenting or failing to disclose material information about PGNS's financial condition. The complaint alleges that PGNS and certain of its officers and directors participated in a fraudulent scheme to misrepresent the Company's sales of its primary product, the antibiotic Tobramysin ("TOBI"). Plaintiff alleges that defendants failed to disclose that PGNS' increased sales of TOBI in the fourth quarter of 1998 primarily resulted from wholesalers' overstock purchase made to avoid PGNS' imminent increase in TOBI's price, rather than the increasing market acceptance of or growth in the patient base for the drug. The complaint also alleges that defendants failed to disclose their knowledge that sales of the drug in the first quarter would be depressed as a result of its fourth quarter 1998 sales program. These misrepresentations are alleged to have caused PGNS shares to trade at artificially inflated prices. When the truth about the failure of TOBI to achieve the market acceptance claimed by defendants was revealed, the price of PGNS stock plummeted by over $22 per share or 70% per share to just $12 per share. PATHOGENESIS CORP.: Zwerling Schachter Files Washington Suit ------------------------------------------------------------ Zwerling, Schachter & Zwerling LLP filed a class action lawsuit on March 30, 1999, in the United States District Court for the Western District of Washington on behalf of all persons who purchased securities or sold put options of PathoGenesis Corporation (Nasdaq: PGNS) between January 25, 1999 and March 22, 1999. The complaint charges PathoGenesis, and certain of its officers and directors, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5. Specifically, the complaint alleges that defendants issued materially false and misleading statements concerning the market for its sole product, the antibiotic Tobramycin, a drug for the treatment of cystic fibrosis. The complaint further alleges that as a result of the issuance of these statements, the price of PathoGenesis securities was artificially inflated, providing an opportunity for the Company's Chief Executive Officer and Chairman of the Board to sell 10,000 shares of PathoGenesis common stock to the investing public at artificially inflated prices, and realize proceeds from these sales of approximately $475,000. SAFESKIN CORPORATION: Abbey Gardy Files Complaint in California --------------------------------------------------------------- Abbey, Gardy & Squitieri, LLP filed a class action in the United States District Court for the Southern District of California on behalf of purchasers of Safeskin Corporation (Nasdaq: SFSK) securities during the period October 28, 1998 through March 11, 1999. The Complaint charges Safeskin and certain of its officers and directors with violating the federal securities laws. The plaintiff claims that defendants misrepresented and concealed material facts concerning the Company's business and its financial results and that certain officers sold Safeskin common stock while failing to disclose material, adverse information about the Company and its financial results. SAFESKIN CORPORATION: Milberg Weiss Files Suit in California ------------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit in the United States District Court for the Southern District of California against Safeskin Corporation (Nasdaq: SFSK) and its officers and directors for violations of the Securities Exchange Act of 1934. The suit is on behalf of all who purchased Safeskin publicly traded securities between February 18, 1998 and March 11, 1999. STAFFMARK, INC.: Milberg Weiss Files Complaint in California ------------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit in the United States District Court for the Central District of California against StaffMark, Inc. (Nasdaq: STAF) and certain of its officers and directors, charging violations of the Securities Exchange Act of 1934. The suit is on behalf of all who purchased StaffMark common stock between October 8, 1998 and March 2, 1999. TOTAL RENAL: Milberg Weiss Files Complaint in California -------------------------------------------------------- Milberg Weiss Bershad Hynes & Lerach LLP filed a class action lawsuit in the United States District Court for the Central District of California against Total Renal Care Holdings, Inc. (NYSE: TRL) and its officers and directors for violations of the Securities Exchange Act of 1934. The suit is on behalf of all who purchased TRC securities between February 17, 1998 and February 17, 1999. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. ISSN XXXX-XXXX. 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